New report analyzes agricultural sector support and taxation in Jamaica

Economic growth in Jamaica is driven by three primary industries, the smallest being agriculture. Agriculture accounts for a declining share of GDP and employment but is still a key factor of rural life in Jamaica. The role of agriculture in the economy is rapidly evolving, with climate change and risky natural conditions on the island contributing to insufficient yields for domestic needs. Furthermore, the amount of support from the government’s budget to agriculture is limited, while the taxation system has had both a direct and indirect negative impact on the sector.

A result of solid cooperation between the Government of Jamaica, Inter-American Development Bank (IDB) and FAO, the report “Jamaica: Review of agricultural sector support and taxation” was recently published by the FAO Investment Centre. This report analyzes the mechanisms employed by the Jamaican Government to support agriculture and endeavors to understand whether these mechanisms consider the challenges of climate variations. The report summarizes the essential features appearing in three major studies completed under the FAO/IDB cooperation that provide analysis on producer support (the Agricultural Sector Support Analysis), on agricultural taxation (the Agricultural Taxation Report), and on the  consequences of climate change on Jamaican agriculture (“Climate Change and Agriculture in Jamaica”, which was just published by the FAO Climate, Energy and Tenure Division).

This publication presents options for changes in Jamaica’s agricultural policy mix. The primary focus is how to set up an appropriate framework to enhance the sector’s competitiveness in a fiscal austerity policy climate so that conditions of growth and poverty reduction can be achieved in the future.

The conclusion of this threefold study underlines the high level of support devoted by Jamaica to its agricultural sector; support that is however essentially focused on a limited number of prioritized subsectors, while other subsectors that are more competitive are taxed or unsupported. In addition, the review recommends a series of proactive policy and economic measures to develop a competitive agricultural sector and reduce poverty